Paid family leave increasing in Calif., San Francisco sees further top-up

Beginning in 2018, California’s new paid family leave benefits will pay workers, depending on their salary, up to 70% of their weekly normal earnings, up from 55%. And as a result of a city ordinance, San Francisco employers will have to top up these benefits to 100% of salary for some workers.

“What the state legislation provides is six weeks of paid benefits under the Unemployment Insurance Code,” says Kate S. Gold, a Los Angeles partner in the labor and employment practice of law firm Drinker Biddle & Reath.

Before Governor Jerry Brown signed Bill 908 into law in mid-April, California workers were entitled to have 55% of their wages reimbursed if they took up to six weeks a year off to care for specified family members or to bond with a minor child within one year after the child is born or placed in foster care or for the purposes of adoption.

For claims beginning on or after January 1, 2016, weekly benefits range from $50 to a maximum of $1,129. To qualify for the maximum weekly benefit amount an individual must earn at least $26,070.92 in a calendar quarter during the base period.

Starting in 2018, for California employees earning up to 33% of the state average weekly wage ($1,129 in 2016) PFL wage replacement will go up from 55% to 70% of normal earnings. Employees earning more than the 2018 state average weekly wage per week will be eligible for six weeks of benefits equal to 60% of normal earnings. The one-week waiting period for PFL claims has also been eliminated.

“To be eligible for the benefit which can be paid once a year, an employee must have earned at least $300 in the base period, which is the preceding 12 month period as established by the Economic Employment Department,” Gold says.

She also notes the state changes to PFL are of little concern to employers because the enhanced benefits will continue to be paid for by employee contributions to the state disability insurance fund. However she notes that the top-up to 100% of salary available to some San Francisco employees will have a greater impact on Bay Area employers because it will come right out of their pockets.

San FranciscoThat’s because the Paid Parental Leave Ordinance passed by the San Francisco Board of Supervisors effective in 2017 compels employers to make up the difference between the state benefit and full salary, providing full pay for all six weeks of leave for most employees.

San Francisco employees will have to be employed by their employer for at least 180 days before starting the leave period to be eligible for the top up benefit. To be entitled for supplemental compensation under the ordinance, employees must also agree to allow their employer to apply up to two weeks of unused accrued vacation leave to help meet the employer’s obligation to provide supplemental compensation.

Covered employees can be part-time or temporary employees, but they must spend at least 40% of their total weekly hours (and eight hours per work week) for the employer within the geographic boundaries of San Francisco. The total state benefit and employer top up cannot exceed 100% of employee salary.

As of January 1, 2017, the ordinance will apply to all employers who regularly employ 50 or more employees, regardless of location. Over the following year, the ordinance will be phased in until employers with just 20 employees or more must comply after January 1, 2018. However, rights under the ordinance can be waived through collective bargaining.

"The real challenge for employers is to reconcile the rules for job-protected leave because there are a series of federal and state laws which intersect and overlap."

Gold says upcoming changes in California and San Francisco wage replacement rules are pretty straightforward but the real challenge for employers is to reconcile the rules for job-protected leave because there are a series of federal and state laws which intersect and overlap.

New York, other states

In early April, New York Governor Andrew Cuomo also signed legislation adopting a 12-week paid family leave policy for New York employees that will be phased in gradually.

Starting on January 1, 2018, employees will be eligible for eight weeks of paid leave, earning 50% of their weekly pay (capped at 50% of the statewide average weekly pay). The number of weeks of leave and amount of pay increases yearly until, by 2021, employees will be eligible for the full 12 weeks of paid leave, earning 67% of their weekly pay (capped at 67% of the statewide average weekly pay).

In order to be eligible to receive paid leave benefits, employees are required to have worked for their employer for at least six months. Paid leave benefits will be available on the first full day that leave is required for eligible employees (unlike New York State disability benefits where there is a waiting period before employees start receiving benefits). The paid family leave will be funded by a weekly payroll tax of about $1 per employee, deducted from employees’ paychecks.

Late in 2015, New York City Mayor Bill de Blassio gave 20,000 non-unionized public employees six weeks of fully paid parental leave beginning in 2016. To pay for the benefit, city employees’ total annual vacation days were reduced to 25 days from 27 and the city eliminated a scheduled 0.47% pay raise for managers. The over 300,000 unionized workers will have to collectively bargain a deal.

Several other states that provide some paid family bonding and caregiver leave are New Jersey, Rhode Island and Washington.